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TMI Blog2022 (8) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... ng capacity of more than thirteen persons (including the driver) for the same - the applicant is eligible for availing input tax credit of the tax paid for hiring of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of their employees to and from the workplace. Extent to which the input tax credit can be availed by them as they are recovering a part of the cost incurred for transportation from the employees - HELD THAT:- The applicant cannot avail of the input tax credit of tax paid corresponding / attributable to the cost of transportation recovered from the employees - the eligibility of the applicant to avail input tax credit will be restricted to the extent of the cost of transportation borne by the applicant. - KER/128/2021 - - - Dated:- 18-2-2022 - DR S. L. SREEPARVATHY, IRS SHRI ABRAHAM RENN S., IRS MEMBER Authorized Representative : Mr. Kollengode Venkitaraman Padmanathan 1. M/s. Malabar Cements Limited (hereinafter referred to as the applicant) is a Government of Kerala owned Public Sector Company engaged in the manufacturing of cement. 2. At the outset, it is clarified that the provisions of the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.3. Clause (a) of Section 17(5) of CGST Act restricts ITC on motor vehicles for transportation of persons having approved seating capacity of not more than 13 persons (including driver) except when used for a specific purpose. From a reading of Clause (a) and (b) of Section 17(5) of CGST Act, it is clear that ITC would be admissible on leasing, renting or hiring of a motor vehicle where the approved seating capacity is more than 13 passengers (including driver). 4.4. The Hon'ble High Courts in CCE, Chandigarh-II Vs. Federal Mogul Goetze (India) Ltd; 2015 (39) STR 735 (P H) (as well as in CCE, Bangalore -II Vs Stanzen Toyotestsu India (P) Ltd, 2011 (23) STR 444 (Kar) has held that transportation of employees to the workplace has a direct bearing on manufacturing and hence, it is activity related to business. The transportation facilities are open to all employees of the applicant who are desirous of availing the facility. But once an employee ceases to be in employment with the applicant, he or she is not authorized to use the transportation facility. In other words, the employer-employee relationship is a must to avail the facility. Furthermore, the applicant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a personal hearing on 26.10.2021. Shri Kollengode Venkitaraman Padmanathan represented the applicant in the personal hearing. The counsel reiterated the contentions made in the application and requested to issue a ruling based on the submissions in the application. 7. Discussion and Findings 7.1. The matter was examined in detail. The application is admissible under subsection (2) of section 97 of the Act. The issue to be decided is the eligibility of input tax credit of GST charged by the service provider on hiring of bus or motor vehicle having approved seating capacity of more than 13 persons for transportation of employees to and from the workplace and the extent of its eligibility. 7.2. The Applicant has engaged the service provider to provide bus transportation facility to their employees in non-air-conditioned buses having a seating capacity of more than 13 persons and the service provider is charging GST for the services rendered. The first question is regarding the eligibility of the applicant to avail input tax credit of such GST charged by the service provider. 7.3. Sections 16 to 18 of the CGST Act, 2017 stipulates the circumstances in which ITC is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles and other conveyances except when they are used (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers: or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods: (b) the following supply of goods or services or both- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a dub, health and fitness centre: (iii) rent-a-cab, life insurance and health insurance except where- (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force: o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and health insurance: Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitness centre; and (iii) travel benefits extended to employees on vacation such as leave or home travel concession: Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force. 7.6. On a plain reading of the above provisions, it is evident that only the tax paid on motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver) is not available as input tax credit except under the situations prescribed therein and there is no restriction in availing input tax credit of the tax paid on motor vehicles or hiring or renting of motor vehicles having ..... X X X X Extracts X X X X X X X X Extracts X X X X
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